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Patent pending: New law could help or hurt IT innovators

By Kathleen Hickey

Sep 20, 2011

After a seven-year debate, President Barack Obama has signed into law the Leahy-Smith America Invents Act, the first major reform of the U.S. patent system in years. But whether the reforms will spur innovative technology — or rein in litigation — remains debatable.

The law “makes some seemingly sweeping changes, but a closer examination shows that the courts have already done much of the job for Congress,” Kirk Tesca writes in IEEE Spectrum. Teska is an adjunct law professor at Suffolk University Law School and is the managing partner of Iandiorio, Teska & Coleman, an intellectual property law firm in Waltham, Mass. IEEE, the Institute of Electrical and Electronics Engineers, is a nonprofit association for advancing technology innovation.

The biggest change the law makes is the move to a first-to-file system, rather than first-to-invent. In a first-to-invent system, patents are awarded based on who thought of it first, which when in dispute can tie things up in court. In a first-to-file system, which is used internationally, patents are awarded to the first person who files for it. Adoption of the first-to-file system will be delayed for 18 months.

Proponents of the change say it will lower costs, by reducing or eliminating court hearings on which entity first conceived of an idea. Opponents, however, believe the change puts smaller organizations and individuals at a disadvantage without radically reducing litigation.

“It’s true that an ‘interference’ — the proceeding in which the patent office decides which of two applicants was the first to invent something, and thus the winner of a patent — is both expensive and time consuming,” Tesca writes. “But interferences don’t happen very often (for less than one-tenth of one percent of the half million patent applications filed each year), and in the vast majority of cases, the first filer wins anyway. ... Maybe that’s why patent reform has languished — it seems to propose solutions to problems we don’t really have.”

And although the law adds new procedures for challenging patents, “these procedures offer few practical chances for ordinary people who don’t constantly monitor the Patent Office,” blogged Julie Samuels, Electronic Frontier Foundation staff attorney.

“The new law will do virtually nothing to fix many of the system’s fundamental problems,” Samuels writes. “The legislation wholly fails to address many of the biggest problems plaguing the patent system, especially the problem of patent trolls. This is especially troubling now, as trolls are targeting small app developers, driving some of those developers out of the U.S. market entirely.”

Patent trolls – companies that make money by suing for patent infringement – are rampant in the technology sector. And big name companies such as Microsoft, Apple and Google are often embroiled in lawsuits, as both plaintiff and defendant.

Microsoft and Google recently have been involved in a high-profile wrangle with each other over patents and Google’s Android platform, although that spat so far has been a public relations battle rather than a court fight.

One reason technology patent disputes are so common is that every IT innovation uses and builds upon other technologies, making it difficult, if not impossible, to establish clear delineations between patents, wrote GCN’s William Jackson.